# Which portfolio would you choose?

Based on current dividend yields and expected capital gains the expected rates of return on por Show more Based on current dividend yields and expected capital gains the expected rates of return on portfolios Aand B are 7.9% and 8.1% respectively. The beta of A is .8 while that of B is 1.4. The T-bill rate is currently 4% while the expected rate of return of the S&P 500 index is 8%. The standard deviation of portfolio A is 30% annually while that of B is 51% and that of the index is 40%. Think about what are the appropriate performance measures to use in question a and b and why. a. If you currently hold a market index portfolio what would be the alpha for Portfolios A and B?(Negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage rounded to 1 decimal place.) If you currently hold a market index portfolio what would be the alpha for Portfolios A and B?(Negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage rounded to 1 decimal place.) Alpha Alpha Portfolio A % % Portfolio B % % b-1. If instead you could invest only in bills and one of these portfolios calculate the sharpe measure for Portfolios A and B. (Enter your answer as a decimal rounded to 2 decimal places.) Sharpe Measure Sharpe Measure Portfolio A Portfolio B b-2. In scenario b which portfolio would you choose? In scenario b Which portfolio would you choose? Portfolio A Portfolio B Portfolio A Portfolio B Show less